The Inverse H&S
Stocks opened sharply lower last week after Standard & Poor’s moved U.S. debt from a stable to a negative outlook. That was on Monday. The market indices spent the next couple of days recouping some of those losses, but after a strong earnings report from Intel late Wednesday, the indices took off and we saw green across the board.
For the TSP, the C-fund was up 1.35% during the holiday shortened week. The S-fund gained 1.41%, and the I-fund led the way at +2.18% as the dollar slid further down. Bonds (F-fund) gained 0.11%, and the G-fund was up 0.05%.
For the month of April the C-fund has turned positive and is up 0.95%, the S-fund is up 0.74%, the I-fund has gained 3.46%, while the F-fund (bonds) is up 0.64%, and the G-fund has made 0.17%.
The S&P 500 temporarily moved below the 50-day EMA last Monday, and that was a major warning for us, but it quickly recaptured it - and the 20-day EMA. In just a few short days we went from Uh Oh, to seeing the inverse head and shoulders pattern that we have been tracking for a couple of weeks, completing the right shoulder (RS) and it is now testing the neckline.
Chart provided courtesy of www.decisionpoint.com
These head and shoulders / inverse head and shoulders patterns have a tendency to do one of two things.
The first would be for it to breakout through the neckline, and at some point come back and test the neckline again before resuming another leg higher.
The other common option is to see a test of the head before the breakout above the neckline.
These are obviously very different scenarios in the short-term so I will just be watching closely for clues as to which way it wants to go, but looking out a little further – perhaps months – both patterns are bullish for the market and we should be seeing new highs on the S&P 500 before the end of the year. The targets are actually quite positive.
What happens after that, I don’t know. I am not too excited about the long term prospects of the market given the economic situation around the world, but I don’t manage my account based on my less than perceptive understanding of how things work, which is why I use the charts to help show me the way.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
Stocks opened sharply lower last week after Standard & Poor’s moved U.S. debt from a stable to a negative outlook. That was on Monday. The market indices spent the next couple of days recouping some of those losses, but after a strong earnings report from Intel late Wednesday, the indices took off and we saw green across the board.
For the TSP, the C-fund was up 1.35% during the holiday shortened week. The S-fund gained 1.41%, and the I-fund led the way at +2.18% as the dollar slid further down. Bonds (F-fund) gained 0.11%, and the G-fund was up 0.05%.
For the month of April the C-fund has turned positive and is up 0.95%, the S-fund is up 0.74%, the I-fund has gained 3.46%, while the F-fund (bonds) is up 0.64%, and the G-fund has made 0.17%.
The S&P 500 temporarily moved below the 50-day EMA last Monday, and that was a major warning for us, but it quickly recaptured it - and the 20-day EMA. In just a few short days we went from Uh Oh, to seeing the inverse head and shoulders pattern that we have been tracking for a couple of weeks, completing the right shoulder (RS) and it is now testing the neckline.
Chart provided courtesy of www.decisionpoint.com
These head and shoulders / inverse head and shoulders patterns have a tendency to do one of two things.
The first would be for it to breakout through the neckline, and at some point come back and test the neckline again before resuming another leg higher.
The other common option is to see a test of the head before the breakout above the neckline.
These are obviously very different scenarios in the short-term so I will just be watching closely for clues as to which way it wants to go, but looking out a little further – perhaps months – both patterns are bullish for the market and we should be seeing new highs on the S&P 500 before the end of the year. The targets are actually quite positive.
What happens after that, I don’t know. I am not too excited about the long term prospects of the market given the economic situation around the world, but I don’t manage my account based on my less than perceptive understanding of how things work, which is why I use the charts to help show me the way.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
